Byju’s has been in the news for all the wrong reasons: the company fell short on funds, defaulted on salaries, provident funds, vendor payments, delayed FY22 and FY23 audited results, and much more.
But there might be a silver lining for the Bengaluru-based firm. The company’s major bet Aakash Institute—which could potentially save it from its maze of perils via an IPO—continued strongly, posting a solid growth with over 82% rise in profits during FY22.
Aakash’s revenue from operations grew 44.56% to Rs 1,421 crore in FY22 from Rs 983 crore in FY21, its standalone financial statement sourced from the Registrar of Companies shows.
For the record, Aakash reported Rs 1,214 crore in operating revenue in FY20 which dropped to Rs 983 crore in FY21.
Aakash Institute offers NEET, IIT-JEE, Olympiad NTSE, classroom courses along with distance courses for engineering and medical aspirants. Fees received from students to provide coaching services accounted for 87.8% of the firm’s total revenue which increased 48.4% to Rs 1,282 crore in FY22.
Rest of the income was generated from the franchisee model which saw a 16.8% increase to Rs 139 crore in FY22.
The company also had other income (non-operating) of Rs 43 crore mainly from interest, manpower, and Covid19 rent concession in FY22.
On the cost side, its employee benefits which include staff and faculty costs formed 54% of the total expenditure. This cost increased by 35.4% to Rs 723 crore in FY22 from Rs 534 crore in FY21.
Its advertising and promotional, study materials, legal professional, information technology, franchise fees, and other overheads took the overall expenditure up by 34.5% to Rs 1332 crore in FY22 from Rs 990 crore in FY21.
See TheKredible for the detailed expense breakdown.
- Cost of materials
- Employee benefit expense
- Advertising promotional expenses
- Legal professional charges
- Information and technology
- Security and housekeeping charges
- Franchise service fees
The satisfactory scale and cost management helped Aakash post an 82.34% surge in profits to Rs 79.5 crore in FY22 as compared to Rs 43.6 crore in FY21. Its ROCE and EBITDA margin stood at 24.6% and 68.3% respectively.
|Expense/Rupee of ops revenue
On a unit level, it spent Rs 0.94 to earn a rupee in FY22.
In June last year, Byju’s announced that Aakash would go public in the next 12 months or June 2024. In November, Aakash also raised $168 million from Manipal Education and Medical Group chairman Ranjan Pai to clear the debt raised from Davidson Kempner in May last year.
Aakash competes with FIIT JEE, Allen, and Bansal Classes, among others. Delhi-based FIITJEE’s revenue from operations increased 21% to Rs 542 crore in FY23 from Rs 448 crore in FY22. However, the company slipped into losses. Allen, on the other side, posted Rs 429 crore profit after tax with revenue of Rs 2,277 crore in the last fiscal year.
The FY22 numbers come rather late in the day, even as they continue to point to Aakash as being one of the few acquisitions where Byju’s did not blunder. Having said that, with these numbers being the story for almost 2 years back, it is anyone’s guess how Aakash has fared since, as Byju’s has lurched from crisis to crisis. Feedback on the ground indicates clearly that the institute has been hamstrung somewhat due to pressure to maintain profitability, but we will need to look at the FY23 results to validate this. The high hopes from a successful Aakash IPO bailing out Byju’s are also receding somewhat, as the sheer scale of financial morass Byju’s finds itself in becomes obvious. From a firm that was the epitome of the aggressive acquirer till FY22 end, we believe Byju’s will be seen shedding equally fast in this year for it to have an opportunity at redemption.